Vehicle Transfer on Death in Minnesota

With the high price of new vehicles these days, anyone is likely to be thrilled to inherit a vehicle. Some states make this easy, while others require the estate to pass through the probate process in order to transfer a vehicle title from a decedent to a beneficiary.

Minnesota is one of the states that makes transferring a vehicle on death very easy. And it offers several options as well.

The obvious way to transfer title to a car or truck when the owner dies is to take the estate through probate. Probate is a court-supervised procedure for passing an estate's assets to the decedent's beneficiaries named in the will or, if there is no will, to the heirs under the intestate statutes.

Essentially an executor is appointed who collects the estate assets, verifies and pays the estate debts and taxes, and transfers the assets to the person or persons to receive them.

However, probate can be a long and expensive process, and some states tax the value of the estate. The executor is generally paid a fee and must jump through many hoops to make sure all potential heirs, beneficiaries and creditors are notified. This is particularly troublesome when the estate is small. That's why many people prefer to avoid probate. Fortunately, there are other ways to transfer a vehicle title on death of the owner.

A decedent who wishes to pass title to their vehicle to a person they trust in Minnesota can use joint ownership to accomplish this. That is, by holding title with another person or persons, the deceased's title can pass to the other joint owner or owners without fuss or muss and outside of probate.

How does this work? If two names are on the vehicle title certificate joined by the conjunctive "or" it establishes a right of survivorship. It is the same as holding title to real property in joint tenancy with the right of survivorship: When one owner dies, the other automatically takes their share. Each has the right to inherit from the other if they are the survivor.

The procedure for issuing a new title in the survivor's sole name in Minnesota is not difficult. The surviving co-owner provides the death certificate or the obituary of the other owner, as well as the vehicle title to the Minnesota Department of Public Safety and Vehicle Services. Transfer fees are charged.

For many years, Minnesota offered an easy transfer-on-death procedure for common assets like real estate (Transfer-on-Death Deeds or TOD) and bank accounts (Payable-on-Death accounts or POD). However, they did not permit this transfer process for vehicles.

All this changed in 2017 with legislation that created a law permitting a transfer-on-death procedure for vehicles. The law makes this type of transfer exempt from Minnesota motor vehicle tax. However, it does not limit the rights of secured parties or creditors, so the beneficiary takes title with any existing liens.

Using this procedure is quite straightforward. The owner completes the Application for Transfer on Beneficiary by filling in:

• Owner information including name, date of birth and driver's license number.
• Transfer-on-death beneficiary information including name, date of birth and driver's license number.
  
• Motor vehicle information.
• Spousal consent with notarized signature if owner is married and beneficiary is not their spouse.
• Acknowledgement and signature under oath.

This application must be filed with a completed Application for Motor Vehicle Title PS2000. Title transfer fees are due for the application.

Transferring a vehicle on death with a TOD has certain advantages over using the right of survivorship. The biggest one is that the owner does not have to yield any interest in the vehicle until they die and can change their mind at any time until then.

As is the case with other TOD forms in Minnesota, filing the Transfer on Death form does not give the beneficiary any current legal interest in the property. Their interest arises at the death of the title holder and not before. Until the owner dies, they can change or revoke this at will.

On the other hand, if a person adds another name to their vehicle title, that is a done deal – they cannot remove the name without the person's consent. And if they wish to sell the vehicle, they cannot do so without the second owner's permission and signature.

Another option for vehicle owners in Minnesota is to place their vehicle into a revocable intervivos trust, also called a revocable living trust. Assets are transferred to the revocable trust, and the trust document usually directs the trustee to pay all income to the person making the trust, termed the settlor.

The trust also contains instructions for subsequent trustees once the settlor dies. The living trust must be set up first, then the title to the vehicle must be transferred to the trust. This must take place during the lifetime of the owner. When the owner dies, the new trustee, or manager, of the trust transfers the vehicle to the new owner by submitting the title, a copy of the trust document and evidence of the former owner’s death to the Minnesota Department of Public Safety.

In Minnesota, the question of whether an estate must pass through probate depends on how much and what type of property is in it. Generally, probate is not required if, at the time of death, the deceased did not hold title to any real estate in their name alone and did not own personal property in their name alone worth more than $75,000.

Vehicles that do not pass to a new owner by TOD, by joint ownership or through a trust are included in the decedent’s probate assets and must go through the probate process before being distributed. The probate process can be a long one since the estate executive has many tasks to accomplish. They must:

• Locate a will if one was made.
• Prove the validity of the will.
• Find the beneficiaries or heirs.
• Collect the assets.
• Gather the debts.
• Verify and pay the debts.
  
• Pay any taxes.
• Distribute the remaining assets to the deceased’s beneficiaries.
  

For a vehicle, the executor will submit the vehicle title, appropriate fees and proof of the estate’s probate administration to the Minnesota Department of Public Safety.

If the estate is valued at under $75,000 and doesn't have to go through probate, vehicles are transferred using an affidavit or sworn statement. To transfer vehicles with an affidavit, Minnesota requires evidence of the deceased owner’s death, a vehicle title and payment of appropriate fees, along with the affidavit itself.

If a surviving spouse is to inherit a deceased spouse’s vehicle, they complete an Affidavit of Surviving Spouse. Other heirs complete an Affidavit of No-Probate. Both forms are provided by the state’s Driver and Vehicle Services and must be notarized or witnessed.